Pacific Bell cuts cable loose: SBC sells unit to Prime; BellSouth expands operations

The once-promising telco/video market lost another participant last week when SBC Communications announced the sale of Pacific Bell Video Service to PrimeOne, an affiliate of Prime Cable. Terms of the deal were not disclosed.

The sale, which had been rumored around the wireless cable industry since SBC's acquisition of Pacific Bell, leaves only four large telcos-Ameritech, BellSouth, GTE and Southern New England Telecommunications-in the cable market. Ironically, BellSouth last week launched digital wireless cable service in Orlando.

The PBVS sale also closes the book on Tele-TV. The group, which at one time included Bell Atlantic, Nynex and Pacific Bell, had planned a large-scale rollout of video service using the multichannel multipoint distribution service (MMDS) spectrum. However, because of the time required to develop digital equipment, the group eventually disbanded.

Pac Bell in fact became the only telco among the three to launch service and had gained about 50,000 customers in Los Angeles, Orange County and Riverside, Calif., before the sale.

The deal also shuts the door on Pac Bell's cable operations. However, SBC said it would retain a 10% ownership in the video services unit. In addition, Pac Bell will retain its advanced video service unit, which offers specialized video transport to movie studios and post-production companies. "Those remain important services for us, and we're seeing very good business from them," said an SBC spokesman.

Prime Cable, which has more than 500,000 subscribers, could provide a lift for the wireless cable market. Prime will continue operating the California system, changing its name to PrimeOne Tele-TV.

The addition of Orlando as BellSouth's third digital MMDS market also signals that the industry has life left. According to John Hartman, vice president of business development and marketing for BellSouth Entertainment, that affiliate has done even better than anticipated in New Orleans and Atlanta with wireless cable, though he declined to provide subscriber numbers. "On balance we've learned a lot, and we're thrilled with the consumers' response," he said.

BellSouth's announced fiber expansions in Atlanta and South Florida won't slow its deployment of MMDS as a video strategy, Hartman added. "We still see digital MMDS as an excellent tool to gain reasonably rapid coverage of a market."

UUNet WorldCom has been quietly ramping up new digital subscriber line services using Copper Mountain DSL access multiplexers and customer premises modems.

So far this year, UUNet has installed Copper Mountain equipment in 54 central offices. The ISP is changing its DSL focus from integrated DSL to include symmetrical DSL, said Kevin Gatesman, DSL services product manager for UUNet. The new service, which initially will be for Internet access only, is targeted at small and medium-sized businesses that need higher speeds than ISDN DSL.

UUNet has been able to deploy the Copper Mountain DSLAMs through parent company WorldCom. Because WorldCom has competitive local exchange carrier status as a result of its acquisitions of MFS, Brooks Fiber and MCI Metro, WorldCom can contract for the collocation space in the incumbent carrier CO required for the DSLAMs. WorldCom then installs the equipment, which is operated by UUNet over a T-3 link.

The WorldCom links offer UUNet an advantage compare with other ISPs, who often must partner with CLECs in order to get equipment in place, said TeleChoice analyst Ruth Chatterton. With that step already addressed, UUNet has been able to move forward aggressively. Gatesman said the company is now evaluating its CLEC licenses to determine what areas to target with its next wave of deployments.

UUNet's push for new DSL services has helped Copper Mountain exceed its expectations for 1998. The company had projected that it would deploy a couple hundred systems this year. Now it expects that number to reach at least 1000.

PHILIPS DROPS CABLE TELEPHONY Philips Broadband Networks has decided to discontinue its Crystal Line cable telephony platform. Instead, the company will concentrate on developing cable modems and network management systems for cable operators. The move, which doesn't affect Philips' HFC transport line, will result in 12 layoffs.

ADELPHIA EXPANDS VOICE

Adelphia Communications and its CLEC subsidiary, Hyperion Communications, signed a three-year contract with IXC Communications for wholesale long-distance service worth more than $12 million. Under the nonexclusive agreement, IXC will provide both companies with self-branded services.